Spur Corp achieved solid results for the first six months of FY26, driven by the Manufacturing and Distribution segment and the group’s restaurant operations in the Rest of Africa. Despite this good performance, we find that the group’s SA Franchise segment lost market share. We calculate that its market share in restaurants and coffee shops declined 30bps to 20.6% in 1H26, while the segment’s total market share in SA fell 30bps to 9.7%. We believe this was mainly due to increased competition in the festive period, as well as the underperformance of brands such as John Dory’s and Nikos.
The decision to rationalise the group’s brand portfolio should help to avoid carrying businesses with low franchisee take-up and pivot towards restaurants with better locations for trading. The trading performance of regional malls, hotels and casinos was soft for the group, but casinos in particular are a risk. We previously highlighted that online gambling and betting could reduce discretionary spending for food services companies over time, and we also believe the impact of gambling will be more pronounced on food services companies like SUR.
The Rest of Africa division of the International segment was the standout performer, but we worry about management’s ambition to scale up aggressively in Nigeria. While that market represents a significant opportunity for expansion with its many brands, high inflation and adverse trading conditions make trading there difficult, as demonstrated by many other retailers and competitors exiting or scaling down their operations. However, franchising represents a lower risk of expansion, as overhead and operational costs will sit with the franchisee.